State Capitalism or not?
Those who still cling to the basic Bolshevik premise — that the Russian insurrection of October 1917 amounted to a Socialist revolution — are caught inside a trap of their own making. Whichever way they turn, they are landed with an uneasy antagonism between their theory and reality.
Those who faithfully follow Moscow, claiming that Russia today is Socialist, are in a ludicrous position, now that more information is available about Russia, and now that Russia is catching up with the West economically, so that East and West grow daily more similar. Therefore the British “Communist” Party is in catastrophic decline, its membership dwindling and ageing, brandishing their confusion now for all to see.
The Maoists, who assert that Russia has only recently become capitalist, are also in a fix. For it is difficult to believe that the changes in Russia’s economy since the death of Stalin are so profound as to amount to a change from Socialism to capitalism (terms which, though definitions vary, are universally held to describe diametrically opposed systems). It is also difficult to see any fundamental differences in the Russian and Chinese economies, except that China is more primitive and less centrally-directed.
Then, of course, our old friends the Trotskyists are still with us. After a bitter struggle between Stalin and Trotsky over which of them should have the privilege of directing the exploitation of the Russian workers, Stalin won. Trotsky became a fierce critic of the Stalin regime, yet he would still not admit that Russia was capitalist — which would have put a question mark over his own revolutionary career. But it wasn’t Socialist either. Instead, he came up with the formula that Russia was a “degenerated workers’ state,” basically a transitional society between capitalism and Socialism, with lots of deformities.
In practice this meant that Trotskyists always defended the Russian state against other capitalist powers, whilst at the same time criticising some of its “deformities.”
Trotsky and his followers took the view that Russia could not be described as capitalist because the bulk of Russian industry was nationalised. Overall state control, they said, was an advance on capitalism. Bolsheviks have always thought that state ownership was a step in the direction of Socialism, and have sometimes suggested that Socialism itself would be a form of state ownership.
There has long been confusion within Bolshevism on this point. Bogdanov’s Short Course of Economic Science (used by the Bolshevik government) as well as The ABC of Communism (written by two leading Bolsheviks in 1919), followed Marx and Engels in characterising Socialism or Communism as a wageless, moneyless society, and emphasising that mere nationalisation or “state socialism” really contained “no trace of Socialism.” After all, the Bolsheviks have always claimed to be Marxists.
Yet in 1917 Lenin had introduced a distinction between “Socialism” and “Communism,” which till that time all Marxists had given precisely interchangeable meanings. He also produced his famous definition of Socialism as “nothing but state capitalist monopoly made to benefit the whole people.”
In the 1970s, nationalisation is not the thrilling issue it once was. State ownership has grown in all the western countries, and it has been brought emphatically home to the great majority of workers everywhere that being employed by the state is in no way better than being employed by a private corporation. It is not even very different. And in Russia, the extreme of centralised direction reached under Stalin is widely seen to have been merely a phase of development, now a positive hindrance to further advancement.
As a result of this it has been borne in upon many radicals and left-wingers that Russia is state capitalist. The Socialist Party of Great Britain, once almost alone in taking this view, and heartily ridiculed for it, now finds itself in numerous company. Be warned. The “sectarianism” of today is the truism of tomorrow!
The IS Group
However most of the people who have recently come round to the view that Russia is capitalist have not adjusted all of their political views accordingly, but have merely corrected this one point, failing to notice the inconsistencies which then emerge in the remainder of their ideas. For example the group known as International Socialism (IS) is basically a Trotskyist group except that it holds Russia to be state capitalist.
The growth of working-class understanding is a contradictory process. With their emphasis on violence and minority action IS are peddling dangerous deceptions. Yet these are more advanced deceptions than those marketed by the “Communist” Party 20 years ago — more advanced in the sense that they recognise the impracticability these days of equating nationalisation and Russia with Socialism. True, the incorporation of the correct view that modern Russia is capitalist into the fundamentally mistaken and anti-working-class doctrine of Bolshevism, allows this doctrine to gain greatly in immediate appeal. But only at the expense of yet more glaring inconsistencies within the doctrine itself. For instance, the IS claim that capitalism sprang into being in Russia in 1928 after 10 years of transition towards Socialism is breathtaking in its lack of connection with any kind of reality. (1)
Even the Bolshevik leaders (with the exceptions, interestingly enough, of Trotsky and Stalin), conceded that state capitalism existed in Russia following 1917.
Kidron and Mandel
There has recently been a controversy (2) between Michael Kidron (IS) and Ernest Mandel (orthodox Trotskyist) which is interesting to Socialists since it shows Kidron failing to draw reasonable conclusions from his view that Russia is capitalist (in fact failing to fully understand what this means), and Mandel taking advantage of Kidron’s confusion to discredit the whole theory of state capitalism.
Mandel points out that if they were consistent, IS would adopt a position of hostility towards the “Communist” movement. If North Vietnam is state capitalist, how can IS support the Vietcong? If the “Communist” parties are capitalist parties, the potential nuclei of future ruling classes, and if these ruling classes would not be historically progressive, why do IS cooperate politically with them? Mandel might well ask.
Of course, he regards such a position of hostility as unthinkable. But this is precisely the standpoint of the Socialist Party of Great Britain. We have at no time combined with the “Communist” Party or ceased to expose it, and we have always adopted a policy of opposition to both sides in every capitalist war. Unlike IS, we unite theory and practice.
In order to combat Mandel’s argument that Russia is a “transitional society,” Kidron says that there can be no transitional society between capitalism and Socialism. Quite correctly, he states: “The only possible transition is a sudden, revolutionary one.” This promising statement (astonishing coming from IS) is somewhat undermined by the fact that Kidron hasn’t the foggiest clue what Socialism is:
Socialism is a total system. It cannot grow piecemeal within the interstices of a capitalist society. How does workers’ control of production coexist with control by a ruling class when the means of production in dispute are one and the same? How does self-determination and consumer sovereignty (‘production for use’) coexist with the external compulsion and blind accumulation that results from capitalist dispersal?This is one of several instances where Mandel (who has read Marx) has a field day demolishing Kidron (a mere Keynesian-eclectic mouthing misunderstood Marxist phrases). Socialism, of course, has nothing to do with “workers’ control of production.” Socialism means a classless world society, without commodities, without the state, without frontiers. It is therefore interesting to note that Mandel realises what Socialism is, but relegates it to the distant beyond, whereas Kidron wants “Socialism” as quickly as possible, but his “Socialism” isn’t Socialism at all! Mandel’s “transitional society” is basically similar to Kidron’s “Socialism,” and both are actually models of capitalism, since both envisage the retention of the wages system.
Marx argued that wage-labour and capital were quite inseparable. And in a reply to Mandel, C. Harman of IS comments:
Nowhere … is there a single mention of the working class or a single reference to the wage labour/capital relationship. Now this is curious. For it was not Michael Kidron but Karl Marx who wrote ‘The relation between wage labour and capital determines the entire character of the mode of production.’ And this is not an accidental aside . . .But later we find Harman flatly contradicting this, as he must because wage-labour is to remain a feature of the “workers’ state” which is the avowed aim of IS. Harman argues that Russian industry from 1917 to 1928 was not capitalist, though presumably he would not deny that it featured wage-labour.
Neither Mandel nor Kidron seem unduly aware of modern Russian realities. Both seem to believe the Russian economy is “planned” full stop.
What then, is the situation of the Russian worker? He is free to move from factory to factory, from town to town, or occupation to occupation, in pursuit of higher wages, or under pressure of unemployment. And he is forced to do so, since he owns no means of production (except a substantial but dwindling number who have small plots of land, and indeed, need them to keep starvation at bay). He is therefore “doubly free” in Marx’s phrase. He sells his labour-power to a state enterprise for a wage which is less than the price of his product. The surplus is mostly reinvested for his further exploitation, with a small proportion going to keep his rulers in the manner to which they are accustomed. In any circumstances (except general forced labour) it would be quite impracticable for the state to plan wages with any accuracy, but this is impossible in Russia where most workers are on piece rates (described by Marx as “the form of wages most in harmony with the capitalist mode of production”). It has been a pretty constant feature of Russian state capitalism that the actual total wages bill has exceeded (sometimes vastly) the amount foreseen by the plan. In Russia, labour power is clearly a commodity.
A popular view of the Russian economy is that a plan is devised at the top, orders are issued, and enterprises promptly fulfil the plan. The goals of the plan are, first, making an overall profit, second, catching up with the West. Yet to possess any effectiveness at all, the plan must be based on reports from the enterprises, which as well as being concerned to fulfil plans, also have their own profit and loss account, with plenty of incentive to get their profits up.
In fact, the long-term (five-year and seven-year) plans are always drastically modified in practice. They are merely guidelines for the annual (and quarterly and monthly) plans. Even so, several of the long-term plans could not be decreed until long after they were supposed to have started, and one (the sixth five-year plan) had to be abandoned altogether.
In the process of adapting the long-term plan year by year, all sorts of unforeseen factors have to be taken into account, many of which are even by Mandel’s account, unambiguously the products of market forces. Much of the Russian state’s “planning” is thus a matter of anticipating, or even subsequently conforming to, these market forces. It is, however, true that they can exercise considerably “arbitrary” influences. Any capitalist state can do this to some extent (development grants, SET, etc.). The Russian state has much more power, mainly because, with the state monopoly of foreign trade functioning as a protective tariff, and with prevailing internal scarcity, the Russian capitalists have a seller’s market. In relation to the peasants they have a buyer’s market. It is exactly in such monopolistic situations that commodities can sell consistently above or below their values. (3)
But what happens as the disappearing peasant reserve strengthens the workers’ bargaining power? As consumer goods production is increased to raise the workers’ productivity? As consumers (workers and capitalists) get greater choice in their purchases, so that enterprises must become more responsive to the market, hence freer of central direction? What happens as the era of telescope development passes, so that Russian industry must imitate less and innovate more? The Russian capitalists are compelled to abandon by degrees the system of planning with material targets, which served them well as a method of rapid industrialisation, but has now outlived its usefulness.
There are many defenders of western capitalism who assert chat “Socialism” has failed in Russia, which is therefore “returning” to capitalism. Mandel plays into the hands of these people by describing the current decentralisation of profit-seeking initiative as “degeneration” when it is clearly necessitated by advancement. He also thereby gives ammunition to those who argue that “Socialism” is suitable only for backward countries.
What has failed in Russia is not “planning”, much less Socialism, but the attempt to plan a capitalist economy. It is not impossible to operate a technologically advanced society according to a common plan, but it is quite impossible to do this if there are competing economic interests, and if all those working for the plan have to be provided with a monetary incentive for everything they do. In a Socialist economy, with all work entirely voluntary and the price system abolished, it will be entirely feasible to plan all production according to democratically decided criteria.
Between capitalism and Socialism there cannot exist a stable, lengthy transitional period. This point seemed to have dimly penetrated the brain of Trotsky, who recognised the silliness of a “transitional” society which stably maintained itself for generation after generation. He therefore described Stalin’s regime as a pyramid balanced on its head, and predicted it would be toppled in a major war. When the war came, it demonstrated the Russian system to be rather a pyramid stood firmly on its base. (4)
Far from Russia being on the road to Socialism, workers there still have to win the elementary political and trade union rights already gained by western workers. Capitalism continues to exist throughout the world because workers put up with it, and can be abolished as soon as the majority of workers desire Socialism, though this is most strikingly evident in countries which, unlike Russia, have effective workers’ suffrage. It is therefore quite wrong to believe, as Mandel does, that we should support Russia or China against America. It is not worth a single worker’s life or limbs to advance the interests of the Russian rulers against their rivals. Neither does it matter whether Russian enterprises remain formally, legally state-owned or not. This has no bearing on workers’ interests and is beside the point anyway— a nationalised industry can be as free from de facto central control as some “privately-owned” firms.
Mandel’s view would have slightly more plausibility if all his “transitional societies” were politically united under one state. But they compete economically and militarily, and if the whole world were owned by them alone, the danger of our species being exterminated in a war would be no less than it is today—”transitional” indeed!
Russia must of course be seen in its international context. It is here that the IS arguments against Mandel are strongest. As Harman rightly says, there is no such thing as the “inner logic” of a plan. The goals of Russian national planning have been fixed by international competition.
But the force of the IS attack here only throws into more startling relief their .position on the national question (especially now that they have taken-to-supporting, not only the Vietcong, but also the Chinese state which they admit to be capitalist). It is no get-out to proclaim, as Harman does, that they also supported the Kenyan anti-colonial movement, or “the Cypriot struggle led by the cleric Makarios and the fascist Grivas.” That is nothing to be proud of. Neither is this justified by calling it “the Marxist position.” What conceivable excuse can there be for people who claim to be Socialists supporting the slaughter of workers which is a side-effect of the rival capitalist powers’ perennial jostling for a place in the sun?
1 In case the point is missed, this is not only an exercise in labelling the past. So long as IS maintain that the 1917 revolution was Socialist they will be unable to seriously criticise all the garbage that comes in its train, Lenin’s ignorant theory of Imperialism; the concept of the vanguard party and “transitional demands,” etc. So long as they fail to do this, they are an obstacle to the establishment of Socialism.
2 Kidron in International Socialism 36; Mandel’s pamphlet The Inconsistencies of State Capitalism; Debate between Kidron and Mandel at Hull University, 4/11/69; Harman in International Socialism 41.
3 If Mandel’s reasoning were correct, and Russia lacked some of the essential features of capitalism, this would show not that it was transitional between capitalism and Socialism, but “transitional” between Asiatic feudalism (tsarism) and capitalism. The peculiarities of Russian capitalism are the outcome of an unprecedented combination of backward peasant production and advanced industry.
4 It is revealing that Mandel doesn’t dare use Trotsky’s long-since shattered argument that a state bureaucracy cannot constitute a ruling class. Trotsky was prepared to concede that state capitalism could in theory exist provided there was individual ownership of shares in the state.